A simple form of authenticator card available today is the standard "credit card" which includes an embossed, visibly discernible card number. The security of this type of card is easily compromised, since each time the card is used, the card number is made known to the merchant or vendor for validation purposes. It is then possible for the vendor to keep a copy of the card number and to thereafter pose as the card holder in subsequent transactions. The likelihood of this type of abuse can be somewhat diminished by including machine readable information in the magnetic stripe on the card. However, a copy of the information on the magnetic stripe can also be made and retained by the vendor, albeit with additional difficulty. As an alternative, the cardholder can be provided with a personal identification number (PIN) which is associated with the card and which is neither printed on the card in visibly discernible form nor included in the magnetic stripe. If the card itself is misappropriated, the PIN would not be known to the unauthorized user. However, the PIN would be given to and known by a merchant when the card holder initiates a transaction. It is also possible for the PIN to be misappropriated by a person who overhears a transaction or observes the cardholder as the PIN is written or entered via a keyboard or by the vendor to whom the customer gives the PIN to authorize themselves.
In order to avoid all of the problems just described, a more complex form of authenticator card including an account number with a time varying, random component, has been proposed in U.S. Pat. No. 5,146,499 issued to B. Geffrotin on Sep. 8, 1992. This kind of card is known as a "smart card", in that it includes a microcomputer and a self-contained memory. Information contained in such a smart card must be read with a specialized reader, which can be quite expensive and which provides a rather cumbersome user interface. Thus, such readers have not achieved widespread availability, and have not thus far been popular with merchants and users of authenticator cards.